One way to become a leader in a field of study, such as macroeconomics, is to redefine the field such that people who are doing things other than what you’re doing are, by definition, in some other (now-undefined) field.
According to Edward Prescott, winner of the 2004 Nobel Prize, “[T]he meaning of the word macroeconomics has changed to refer to the tools being used [by Prescott and his cohorts] rather than to the study of business cycle fluctuations.”
And on the basis of a few examples of his and Finn Kydland’s tool-using behavior, Prescott tells us that “macroeconomics has changed as a result of the methodology that Finn and I pioneered. It is now that branch of economics where applied dynamic equilibrium tools are used to study aggregate phenomena.”
These remarks are from an edited version of Prescott’s Nobel address printed in the most recent issue of The Region (published by the Minneapolis Federal Reserve Bank). A couple of substantive remarks in that address are also worthy of note:
“One set of key business cycle facts is that two-thirds of business
cycle fluctuations are accounted for by variations in the labor input, one-third by variations in total factor productivity, and virtually zero by variations in the capital service input.”
And: “The welfare gains from eliminating business cycles are small or
Anyone who wants to read more can find it here.